Why Rand Paul wants Congress to balance the budget every year

The first policy proposal Rand Paul announced in his big speech declaring his presidential campaign this week was an old-fashioned plan for the federal budget. The Republican senator from Kentucky wants to amend the Constitution to require a balanced federal budget every year.

The basic idea is to force Congress to spend no more than the government receives in taxes annually. Past versions of the proposed amendment would have also limited Congress's total spending relative to the size of the overall economy.

Paul and other proponents on both sides of the aisle say amending the Constitution is the only way to enforce fiscal discipline in Congress. By putting an old staple of GOP policy at the top of his agenda, Paul may be able to expand his appeal among primary voters concerned about the deficit.

Yet the amendment itself isn't a plan to manage the national debt in the long term, just a broadly stated goal. Reaching it would still mean hard political choices and contentious negotiations.

A balanced- budget amendment fell one vote short of passing Congress in 1995. A few years later, lawmakers and President Clinton balanced the budget anyway amid a rapidly growing economy. In Clinton's last year in office, the federal government took in $236 billion more than it spent, according to the Congressional Budget Office.

The budget fell into deficit again under President Bush. He reduced taxes, generously expanded Medicare benefits for prescription drugs, and ordered U.S. troops into Iraq and Afghanistan. Collectively, Bush's policies expanded the federal debt by more than $5 trillion.

Then the financial crisis struck. With fewer Americans getting paychecks, the government was taking even less in taxes, and spending more on things like unemployment insurance. In addition, President Obama and Congress approved a costly fiscal stimulus in a moderately successful effort to stabilize the economy. By the end of Obama's first year in office, the deficit had expanded to $1.4 trillion.

Large deficits meant the federal budget was a hotly debated topic again. Republicans used the debt ceiling to force a series of budgetary negotiations. If the debt ceiling had expired, policymakers would have been forced to balance the budget immediately or risk national default.

In 2011, Republicans agreed to an increase in the ceiling in exchange for reduced spending and promised votes in both chambers on a balanced budget amendment. It failed again.

Rep. Paul Ryan (R-Wis.), who would later become a vice-presidential candidate, voted against the amendment, saying it wasn't strict enough. He wanted an amendment that would also bar Congress from raising taxes without a two-thirds vote.

At the time, many economists warned that a balanced-budget amendment would dangerously limit Congress's ability to respond to the lingering recession. Joel Prakken of Macroeconomic Advisers pointed out then that in order to keep the budget balanced, policymakers would have to spend less and tax at higher rates, which would hamper the economy even further. His firm conducted an analysis suggesting the balanced-budget amendment would nearly double the unemployment rate, then 9 percent.

"To me, it just seems like folly," Prakken said in an interview this week.

But since those big deficit fights of Obama's first term, things have changed. The deficit has declined by nearly two thirds since the first year of the Obama administration, due in part to limits on federal spending Congress imposed after the debt-ceiling negotiations, and in part to the recovering economy. Relative to the economy's total size, the deficit is now near its historical levels for the past 50 years.

And voters overall are less concerned about the deficit than they were a few years ago. Pew's annual poll shows that 64 percent of voters describe the deficit as a priority for the president and Congress. That statistic peaked at 72 percent in 2013 after rising steadily for a decade.

There's still a large segment of the population with concerns about the deficit whom Paul can address as he enters the primary campaign, especially among GOP voters. Pew found that except for funding the military, the deficit was the question that most divided the two parties, with 72 percent of Republicans and just 55 percent of Democrats saying it should be a priority.

Support for a balanced-budget amendment is "a mainstream Republican position," said Chris Edwards, the director of tax policy at the libertarian Cato Institute.

"I think it's something that people can easily understand and relate to. They've got to balance their own household budgets," Edwards said.

The federal budget differs from household budgets in important ways, though. The government, for example, can continue to run deficits every year--and for much of postwar history, it has--while simultaneously reducing the size of the debt relative to the entire economy, which expands each year. Many economists and some conservative commentators agree that the most important goal is simply to control the debt's size relative to the economy, not eliminate debt altogether.

Edwards rejects this view. "It's irresponsible and unfair to the next generation to push all this debt forward," he said, noting that all the way until the Great Depression, Congress usually balanced the budget. "It's extraordinary, historically, for the United States to have such a massive deficit and one that there’s no plan to balance."

Speaker John Boehner (R-Ohio) made the same point in a speech last year. "For 53 of the last 60 years, we've spent more than we've brought in. Now, this is where people get on me about comparing apples to oranges, but hear me out," he said. "It's bad for our economy. It's stealing from our kids and grandkids, robbing them of benefits they'll never see and leaving them with burdens that are nearly impossible to repay."

Yet Bruce Bartlett, who worked on Rand Paul's father's congressional staff before serving in senior positions under Presidents Reagan and George H.W. Bush, doubts that the younger Paul and other Republicans are serious about addressing voters' concerns about the deficit. Bartlett said that a real effort to balance the budget would require raising taxes substantially.

Polls consistently show that Americans, when asked, tend to support a combination of increased taxes and reduced spending in order to balance the budget. Paul and other Republicans prefer to focus on reducing spending, rather than increasing taxes.

Paul himself has floated a tax cut worth $700 billion every year, which would make even further spending cuts necessary for budgetary balance. While he has not made a centerpiece of his campaign, Paul has described in detail the kinds of changes he'd make to balance the budget. Paul has proposed big cuts to food stamps, an effective increase in taxes on poor working families, and reductions to medical research and disease control, among other things.

Recent balanced-budget proposals have simply been an attempt make limits on spending more palatable to voters, Bartlett argued.

"When they say they're in favor of a balanced budget amendment, what they're actually in favor of is an amendment that would drastically cut spending," Bartlett said. "Balancing the budget involves both revenues and spending."

By supporting the amendment, politicians can symbolically show their support for a balanced budget, without getting into a difficult discussion of how they'd achieve it. And Congress could even agree on the amendment, without coming any closer to agreement on an actual plan for the budget in the long term.

Max EhrenfreundMax Ehrenfreund wrote for Wonkblog and compiled Wonkbook, a daily policy newsletter. He left The Washington Post in July 2017. Follow